Long/short/neutral
TRANSTREND develops and uses trading systems that, applied on any
specific market, indicate a long, a short, or no position.
The latter is much more common than it is for many traditional
trendfollowers. TRANSTREND's trading systems are very selective;
they are developed to generate positions only in their preferred
environments. The percentage of time they are active in a market
varies between systems, ranging from 10 to 40 percent.
The advantage of selecting only the most promising trades is an
attractive expected result per individual trade. However, it could
lead to an insufficiently diversified portfolio. If you had only 30
markets available and were active in each only 10 percent of the
time, your portfolio would have, on average, just 3 components.
This disadvantage is overcome by using a larger set of markets and
by using multiple systems. TRANSTREND typically has positions in
over 75 different markets.
Multiple markets
TRANSTREND strives to be active in all futures and forward markets
worldwide that are freely accessible and liquid. Within these
markets further opportunities are exploited by looking at different
maturities of the same market. Furthermore, spreads between related
markets or between different maturities are treated as possible
markets in their own right. In total, every trading system has
available a market universe of over 300 components.
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Multiple systems
TRANSTREND uses two methods of diversifying over different systems.
- Since small variations in the parameters of TRANSTREND's
systems do not affect their profitability, there are several
equally valid parameter settings. This makes it possible to trade
every system with different settings of the parameters
simultaneously.
- In different market environments different types of trends will
manifest themselves. Consequently, TRANSTREND's trading systems are
specifically designed for predefined market environments and will take
no position in other circumstances. The assessment of the market
environment is an inherent part of the trading system. TRANSTREND
uses the same systems for all markets, however in different market
conditions trades are initiated by different systems.
Stepwise entry and exit
TRANSTREND's trading systems are designed not to depend on rapid,
massive entries and exits for their performance. This is considered
essential to avoid vulnerability to suddenly low market liquidity,
event risk, and performance degradation due to growth in assets.
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